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Atl Econ J (2013) 41:457459
DOI 10.1007/s11293-013-9372-4
ANTHOLOGY
Denis Cormier & Pascale Lapointe-Antunes &
Michel Magnan
Published online: 9 June 2013# International Atlantic Economic Society 2013
There is an ongoing debate about the relevance and reliability of performance measures that depart from generally accepted accounting principles (GAAP). Many firms choose to disclose non-GAAP information, arguing that it provides investors with a more comprehensive picture of their underlying performance than GAAP-based earnings. However, since they are often unaudited and not subject to any standard, such practices raise many concerns among regulators.
The purpose of our study [Contemporary Accounting Research, 2011, vol.28 (5), 15851609] is to investigate a novel non-GAAP performance measure, distributable cash. Distributable cash is the primary performance indicator disclosed by Canadian flow-through entities such as real estate investment trust (REIT) or income trusts, which are mostly in the energy industry but also in other sectors of the Canadian economy. More specifically, we investigate two broad questions. What is the value relevance of distributable cash, especially relative to GAAP earnings? Is reported distributable cash reliable?
The authors acknowledge the financial support of the Social Sciences and Humanities Research Council of Canada (SSHRC), Autorit des marchs financiers (Qubec), the Lawrence Bloomberg Chair in Accountancy (Concordia University) and Corporate Reporting Chair (UQAM). Comments from workshop participants at...